Bad debts tend to escalate After considering the Q1 finance reports of 13 large and medium sized commercial banks, analysts say they have found that bad debts are increasing again.   The report released in early 2018 by NFSC (National Finance Supervisory Council) showed that the quality of credit institutions’ assets has improved.  The non-performing loan (NPL) ratio of the banking system by the end of 2017 had decreased to 9.5 percent from 11.9 percent in late 2016. The council also showed optimistic signs of the bad debt settlement process, reporting that banks had been accelerating the process. However, the finance reports showed that bad debts returned in the first quarter of the year.  By March 31, 2018, the total debts of 13 surveyed banks had reached VND67.8 trillion, an increase of 8 percent over the beginning of the year. Twelve out of 13 banks saw the bad debt value increasing.  However, as the banks accelerated lending, only 8 out of 13 banks saw the ratio of bad debts on outstanding loans increasing. Meanwhile, the fifth-group of bad debts (the debts with the highest risk) had increased by 9.2 percent to VND34.6 trillion by the end of March in comparison with the beginning of the year.  The figure was equal to 51 percent of total bad debts, higher than the 50.5 percent at the end of 2017. After considering the Q1 finance reports of 13 large and medium sized commercial banks, analysts say they have found that bad debts are increasing again VP Bank had the highest NPL ratio among the surveyed banks, 4.15 percent, higher than the 3.39 percent earlier this year. However, most of them were third-group debts, or subprime debts, amounting to 58.6 percent of total bad debts, while the fifth-group debts accounted for 18 percent. Techcombank also saw bad debts increasing rapidly in the first quarter of the year, from VND2.6 trillion to over VND3 trillion, or 18.9 percent. Its fifth-group debts climbed to VND1.7 trillion, a sharp increase of 9 percent over the beginning of the year.  This is equal to 55.3 percent of the bank’s total bad debts which have increased from 1.61 percent to 1.87 percent. Regarding the bad debt value, BIDV is topping the list with VND14.2 trillion worth of NPL, up by VND200 billion compared with the beginning of the year. VietinBank, also a stated owned bank, ranks second with VND10.3 trillion. Bizlive has found that seven out of 13 banks made bigger provisions against risks in Q1 with the value of VND14.7 trillion in total, up by 36.9 percent over the same period last year. BIDV, for example, had provisions amounting to 70.4 percent of the bank’s net profit. However, all the banks reported high growth rates of tens or hundreds of percent over the same period last year. US$1=VND22,000 VNN